UK disposable income falls to lowest since 1921 - papers

Disposable incomes among British households are at their lowest peacetime levels since 1921, amid soaring inflation and low pay rises.

A report by the Centre for Economics and Business Research says the average British family will have £910 less to spend this year than they did in 2009 as a result of Rising food, clothing and energy prices, the Telegraph says.

It calculates household disposable income will fall by 2% this year, more than double last year's fall of 0.8%, representing the biggest drop since the post-WWI recession.

It also predicts inflation will average 3.9% in 2011, its highest since 1992, as January's VAT increase and the rising cost of oil and other commodities continue to drive up prices.

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Top tax rate may be scrapped as early as 2013

The 50p tax band could be scrapped within two years as part of plans to improve Britain's competitive edge

Although many Tories see it as ‘politically unacceptable' to abolish the tax while millions of public sector workers have a two-year pay freeze, the Daily Mail says the Chancellor has pencilled in the 2013 Budget as the time to drop it.

The 50p rate is paid by those earning more than £150,000 a year and was introduced by Alistair Darling as a ‘temporary' measure last year.

George Osborne has asked HMRC to investigate how much money the higher rate raises, although his shadow, Ed Balls, has suggested it should be extended to cover earning over £100,000.

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EU finance ministers not expecting Spain to follow Portugal

European Union finance ministers remain confident Spain will not follow Portugal in seeking a financial bailout, stopping the spread of the region's sovereign debt crisis.

Although some governments believe Portugal waited too long to ask for help, there is consensus the EU's government debt crisis had peaked, the Wall Street Journal reports.

Speaking after EU finance ministers wrapped up a two-day meeting in Hungary, German Finance Minister Wolfgang said: "The risk of contagion has lessened. Not that our worries have passed, but we're on the right track."

Spain has made steady progress in slashing its deficit in recent months, although unemployment remains close to 20% and the government's efforts to recapitalize banks hit by the real-estate crash are incomplete.

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